Federal Judiciary

Argument preview: Court considers ownership for government-sponsored patents

By Ronald Mann

Board of Trustees of Leland Stanford Junior University v. Roche Molecular Systems, Inc., to be argued February 28, 2011, presents a classic conflict between text and policy.  The case involves the Bayh-Dole Act, which governs patenting of federally funded inventions.  Before Bayh-Dole was enacted in 1980, the federal government typically took title to patents that arose out of federal research grants.   Driven by a perception that such patents would be exploited more effectively if private parties controlled them instead of the Government, Congress established a set of procedures under which the contractor can gain title to such a patent.  All agree that innovation based on such patents has mushroomed since the statute was passed in 1980.

The ordinary process under Bayh-Dole is that the contractor (in this case, Stanford University) obtains an assignment of all intellectual property rights from its employee-inventors.  When a patentable invention is made, the contractor must provide a variety of forms and notices to the funding agency; if it does so, it is allowed to retain the patent in its own hands (instead of it passing to the funding agency).  The issue in this case arose because Stanford did not obtain a valid assignment from its employee; rather, the employee assigned rights to the patent to Cetus (the predecessor to respondent Roche) in return for access to Cetus?s valuable technology for polymerase chain reactions (PCR).  The patent governs Roche?s highly successful PCR assay used to test for the AIDS virus.  Lacking an assignment from the inventor, traditional rules of patent ownership suggest that Stanford never acquired ownership to the patent in the first instance.  The central issue in the case is whether patents issued after Bayh-Dole still vest in the first instance in the inventor (the traditional rule) or whether instead they vest automatically in the contractor.

The Federal Circuit held for Roche, reasoning that nothing in Bayh-Dole supplanted the traditional rule that the ownership of a patent vests in the first instance in the inventor.  When Stanford sought review, the Court called for the views of the Solicitor General; the Court granted review after the Solicitor General recommended that certiorari be granted.

The most interesting thing about the briefing is how to structure a top-side brief in a case in which the statutory language is so plainly favorable to respondent.  Here, Patent Act § 101 provides that ?[w]hoever invents or discovers a new and useful * * * may obtain a patent therefor.?  Because the Bayh-Dole Act applies only to inventions ?of the contractor,? it seems evident that the statute applies only to inventions that the contractor obtains from its employee, the inventor.  Although the point is not emphasized in the briefing, the inference is underscored by parallel provisions in the Copyright Act (17 U.S.C. § 201), which make the employer the original author of copyrights in works made for hire.  The absence of any such provisions from Bayh-Dole or the Patent Act, coupled with the pervasive use of contracts assigning inventions from employees to employers (like Stanford), underscores the background assumption that such inventions are owned in the first instance by the inventor rather than the employer/contractor.

So how do you write a brief when the language is so plainly against you?  Petitioner Stanford (represented by Jones Day and Pam Karlan) does not confront the statutory language ? Stanford?s brief does not even cite Patent Act § 101.  Rather, it presents a lengthy discussion of the policy behind Bayh-Dole ? that contractors should own patents for government inventions.  Moreover, it contends, nobody has ever thought that employees, rather than their employers who receive federal grants, should exploit such patents.

The amicus brief filed by the United States, by contrast, addresses the problem more directly.  Thus, the United States argues that rights to the patent vest initially in the contractor, so that the inventor-to-be lacked the capacity to assign rights to the patent when he visited Cetus.  Thus, in the government?s view, all that the inventor assigned was a right subject to the supervening Bayh-Dole right of the contractor and government in the invention.

Roche responds with a powerful and direct presentation that emphasizes the language of the statute that vests patents in the inventors and the commonality of examples (all outside Bayh-Dole) in which Congress has explicitly vested patents in particular federal agencies.  The impression that the statute on its face supports Roche could not be clearer.

Probably the most significant problem for Stanford and the Solicitor General is the widespread practice of requiring individual inventors to execute documents in which they assign their existing and prospective inventions to their employers.  Bob Long (Covington and Burling) provides an excellent amicus brief (for Pharmaceutical Research and Manufacturers of America) detailing these practices and the extent to which agencies have consistently required such assignments.  It is left to Stanford and the Government to explain the common practice of requiring assignments that in their view are wholly superfluous.

The Court consistently has been skeptical about the Federal Circuit?s adherence to special rules of patent law and frequently has deferred to the Government?s views about how to craft patent policy.  But in this case, the Government?s interest is much more directly proprietary and much more in tension with the language of the statute.  I predict a tough time for the Solicitor General?s representative at oral argument.

Full post as published by SCOTUSBLOG on February 24, 2011 (boomark / email).